SUPPLY CHAIN ANALYSIS OF HANDMADE TEXTILE MANUFACTURING INDUSTRY USING SUPPLY CHAIN OPERATIONS REFERENCE(SCOR) MODEL: ACASE OF GAMO ZONE

Abstract

Supply chain management is a process of designing, developing, optimizing, and managing the internaland external components of the supply system in a consistent manner with the overallfirm‘s objectives and strategies. In today's businessenvironment, companies are operating in supply chains to increase efficiency and truly meet the customers' demand. Because of theimportance of supply chain management to compete in the current market, there is agrowing need of supply chain operation improvement to improve its process efficiency and to meet the customers’ requirements. This study aimed to analyze supply chain operation of handmade textile manufacturing industry in Gamo Zone to improve its efficiency and satisfy customers’ needs. Surveying method of data collection using interview, questionnaire and observation was used to collect the data. Both primary and secondary data were used to identify challenges and gaps of the existing supply chain management. The study utilized Supply Chain Operations Reference (SCOR) model to analyze the existing SC operations and to identify opportunities for future improvement of the supply chain of the case industry. Based on the analysis of the existing SC operation, the main challenges identified were high cost of sourcing due to prolonged supply chain process, shortage of raw material and quality problem, low production efficiency and capacity utilization, lack of modified weaving technologies, lack of appropriate production schedule, poor order and delivery management and weak marketing system. Because of these gaps of SC operation, the overall performance of supply chain of the case industry was poor. Supply chain analysis to improve the efficiency of the case industry was performed based on analysis of existing SC challenges and mapping future improvement on SC planning, sourcing, production and delivery processes using SCOR model. This improvement on SC operation can be achieved by changing source point to local potential suppliers of raw materials, minimizing the number of non-value adding SC actors by linking weavers with suppliers and consumers, using modified production technologies, strengthening direct market linkage with final product users and establishing distribution center for weaving associations in urban areas. This improvement action will minimize cost of sourcing and production, time of delivery, and increase SC efficiency of the industry to meet customers’ demand.